New kids on the geothermal block

 The Department of Energy (DOE) last week granted a geothermal service contract (GSC) to partners Aragorn Power and Energy Corp. (APEC) and Guidance Management Corp (GMC) to explore a potential geothermal area in Kalinga-Apayao. This was announced by the listed APC Group, the parent company of Aragorn Power, in a disclosure to the Philippine Stock Exchange (PSE:APC).

 This brings to three the number of new entrants to the geothermal sector recently awarded a GSC by the DOE.

 Earlier, PSE-listed firm Basic Energy (PSE:BSC), was awarded a geothermal service contract to developed the Mabini, Batangas geothermal prospect while Biliran Geothermal Incorporated (BGI) was awarded a similar contract to explore and develop the geothermal potential of Biliran island province.

 At present the major developer and operator of geothermal fields comprise of Lopez-owned Energy Development Corporation (EDC, formerly PNOC-EDC) and Chevron Geothermal (former Philippine Geothermal Inc.).

 Who are these new kids on the geothermal block, and how serious are their commitments to develop these resources?

 APEC was formed as the vehicle of the parent’s foray into the energy sector. The APC Group was formerly into oil exploration until new investors transformed it into a holding company.

 Its partner, GMC, composed of American, Australian, Spanish and Filipino investors, has committed to initially invest $8 million for surface geological and scientific exploration prior to drilling of exploration wells. The investment could go up to $300 million or more to develop geothermal resources in the country, according to GMC chairman Joaquin Rodriguez.

 GMC itself has been awarded the rights to develop a target 40 MW geothermal power plant at the Amacan geothermal prospect in Compostela Valley.

 Basic energy is aiming to develop 20-40 MW geothermal generation at Mabini prospect which covers 3,841 hectares.

 The third company, Biliran Geothermal Inc. (BGI), will spend $15 million to scour a total area of 22,394 ha. for geothermal resources. It hopes to put up at least 100 MW of electric generation if the exploration results prove its feasibility.

 BGI is a joint venture company formed between Filtech Energy Drilling Corp. (Filtech) and Envent Holding Philippines, Inc.

 Envent is controlled by Reykjavik Energy Invest, which is the energy investment arm of the Reykjavik Energy (Iceland) and Geysir Green Energy, also an Icelandic energy firm which is globally focused on green and alternative energy investments.

 Aside from the Philippine project, the Icelandic group has geothermal development initiatives in Indonesia and Djibouti, Africa, among others. It also participated as a partner to the Lopez-group in taking over PNOC Energy Development Corporation from the government through Red Vulcan Holdings but has already divested from the latter.

 Filtech meanwhile, was formed by a group of former executives of EDC.

 The entry of new investors in the geothermal sector is viewed by industry insiders as a positive development to restart the momentum of geothermal development in the country which has been in the doldrums in the last few years with not much capacity being added.